We covered NXL earlier in the month here post a soft trading update that saw the stock “hit for six”. At that time, we added NXL to our Hitlist for the Emerging Companies Portfolio, but we’re yet ready to hit the buy button. On Monday, they reported 1H25 results that didn’t provide much new news (given the recent update), and what new information we saw we viewed as a net positive, yet the share price has continued to tank. It’s a volatile stock, and tech has not been in favour in the past few weeks, so that’s the only aspect we can see; there was nothing new in the results to concern us.
- Annual contract value (ACV) of $216.2m was in-line with the Jan guide ($215-217).
- Underlying EBITDA of $27.1m was in-line with the Jan guide ($26-28m).
- Free cash flow of $5.8m was mildly ahead.
- They closed the 1H25 with cash of $30m and no debt.
Further, the company expects revenue growth to exceed operating cost growth in FY25 with annualised contract value growth forecast in the range of 11% to 16% in constant currency. The stock was down 9% yesterday closing sub $4, having halved since their November 2024 high of ~$8.
- While price action will keep us on the sidelines for now, NXL will be retained on our Hitlist.
MM remains keen on NXL for the Emerging Companies Portfolio
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